Government spending composition, aggregate demand, growth, and distribution

Zamparelli, Luca; Tavani, Daniele

doi:10.4337/roke.2017.02.06

Cited by 14 publications

(11 citation statements)

References 41 publications

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“…Following the seminal paper by Barro (), neoclassical endogenous growth theory has extensively analyzed the importance of public investment in long‐run growth (see Irmen and Kuehnel, , for a survey). Non‐neoclassical economists have recently picked up the topic: examples can be found in Dutt () and Tavani and Zamparelli (, ). Our exposition here presents slightly modified versions of these contributions that better fit the overall framework of this survey.…”

Section: Costly Innovationmentioning

confidence: 99%

“…To study this model under the post‐Keynesian closure, we need to introduce a role for investment demand. Tavani and Zamparelli () adopt the early Kaleckian investment function

g_{K}^{i} = γ + η r = γ + η false(1 - \overset{ω}{true} false) u χ^{ν}

; the corresponding equilibrium capacity utilization rate is

u^{*} = \frac{γ}{false(1 - \overset{ω}{true} false) χ^{ν} false[s (1 - τ) - η false]}

while the short‐run growth rate is

g_{K} false(τ, γ false) = [\frac{s false(1 - τ false)}{s false(1 - τ false) - η}] γ

If labor supply is endogenous and accommodates capital accumulation, the growth rate of the economy is fully endogenous in the long run and it increases in the tax rate (which constrains government spending) and autonomous investment. If, in addition, productivity growth follows the Kaldor–Verdoorn law, the endogeneity of the growth rate carries over to technical change:

g_{A} = φ_{0} + φ_{1} g_{K} false(τ, γ false)

.…”

Section: Costly Innovationmentioning

confidence: 99%

“…In fact, when labor supply is exogenous, achieving a fully endogenous growth rate requires public investment to directly affect productivity growth. For example, Tavani and Zamparelli () assume

g_{A} = v false(χ_{s s} false) = v (\frac{τ}{s false(1 - τ false)}), v^{'} > 0

with the underlying rationale that abundance of public capital produces more efficient infrastructures, which put private firms in a better position to innovate. An alternative route to full endogeneity of productivity growth can be found in Dutt ().…”

Section: Costly Innovationmentioning

confidence: 99%

“…To study this model under the post-Keynesian closure, we need to introduce a role for investment demand. Tavani and Zamparelli (2017) adopt the early Kaleckian investment function g i K = γ + ηr = γ + η(1 −ω)uχ ν ; the corresponding equilibrium capacity utilization rate is…”

Section: Public Investmentmentioning

confidence: 99%

“…In fact, when labor supply is exogenous, achieving a fully endogenous growth rate requires public investment to directly affect productivity growth. For example, Tavani and Zamparelli (2017) assume…”

Section: Public Investmentmentioning

confidence: 99%

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Endogenous Technical Change in Alternative Theories of Growth and Distribution

Tavani

Zamparelli

2017

Journal of Economic Surveys

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This paper surveys the last two and a half decades of non‐neoclassical literature on endogenous technical change and the functional income distribution. We distinguish between classical‐Marxian and post‐Keynesian models, and analyze them under three different assumptions on the determinants of technical change: capital accumulation, income distribution, and labor market tightness. The balanced growth implications of alternative models are compared with neoclassical exogenous and endogenous growth theories. Despite the strong differences in the assumptions regarding the substitutability between capital and labor, the role of different classes in society, and whether or not productive factors are fully employed, the various alternative models can be classified in a way that highlights remarkable similarities with their neoclassical counterparts. Both neoclassical and alternative theories of endogenous growth: (i) have shown that long‐run growth is sensitive to investment decisions, and (ii) rely on a linear spillover from the stock of knowledge to the production of innovations. The comparison highlights the different channels emphasized by competing theories: saving behavior and market structure in the neoclassical theories, as opposed to income distribution, the state of the labor market, and investors' behavior in alternative theories.

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Section: Costly Innovationmentioning

confidence: 99%

“…To study this model under the post‐Keynesian closure, we need to introduce a role for investment demand. Tavani and Zamparelli () adopt the early Kaleckian investment function

g_{K}^{i} = γ + η r = γ + η false(1 - \overset{ω}{true} false) u χ^{ν}

; the corresponding equilibrium capacity utilization rate is

u^{*} = \frac{γ}{false(1 - \overset{ω}{true} false) χ^{ν} false[s (1 - τ) - η false]}

while the short‐run growth rate is

g_{K} false(τ, γ false) = [\frac{s false(1 - τ false)}{s false(1 - τ false) - η}] γ

g_{A} = φ_{0} + φ_{1} g_{K} false(τ, γ false)

.…”

Section: Costly Innovationmentioning

confidence: 99%

“…In fact, when labor supply is exogenous, achieving a fully endogenous growth rate requires public investment to directly affect productivity growth. For example, Tavani and Zamparelli () assume

g_{A} = v false(χ_{s s} false) = v (\frac{τ}{s false(1 - τ false)}), v^{'} > 0

Section: Costly Innovationmentioning

confidence: 99%

Section: Public Investmentmentioning

confidence: 99%

Section: Public Investmentmentioning

confidence: 99%

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Endogenous Technical Change in Alternative Theories of Growth and Distribution

Tavani

Zamparelli

2017

Journal of Economic Surveys

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Endogenous Technical Change in Alternative Theories of Growth and Distribution

Tavani

Zamparelli

2018

Analytical Political Economy

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This paper surveys the last two and a half decades of non-neoclassical literature on endogenous technical change and the factor distribution of income. The implications of classical-Marxian and post-Keynesian contributions are compared with neoclassical exogenous and endogenous growth theories. We find the comparison illuminating in several respects: despite the strong differences in the assumptions regarding the substitutability between capital and labor, the role of different classes in society, and whether or not productive factors are fully employed, the various alternative models can be classified in a way that highlights remarkable similarities with their neoclassical counterparts. Both neoclassical and alternative theories of endogenous growth: (i) have shown that long-run growth is sensitive to investment decisions; (ii) rely on a linear spillover from the stock of knowledge to the production of innovations, and (iii) match the Kaldor facts in the long run. The comparison allows to evaluate competing theories by looking at the different channels they emphasize: saving behavior and market structure in the neoclassical theories, as opposed to income distribution, the state of the labor market, and investors' behavior in alternative theories.

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Fiscal policy and social infrastructure provision under alternative growth and distribution regimes

Nishi,

Okuma

2023

Evolut Inst Econ Rev

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Government spending composition, aggregate demand, growth, and distribution

Cited by 14 publications

References 41 publications

Endogenous Technical Change in Alternative Theories of Growth and Distribution

Endogenous Technical Change in Alternative Theories of Growth and Distribution

Endogenous Technical Change in Alternative Theories of Growth and Distribution

Fiscal policy and social infrastructure provision under alternative growth and distribution regimes

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